Ahead of the Bell: Costco Wholesale upgraded

CHICAGO

An analyst upgraded Costco Wholesale Corp. on Tuesday, saying the nation's largest warehouse club is poised to handle changes in national health care policy while also fending off competitors.

Stifel Nicolaus analyst David Schick raised his rating on the retailer to "Buy" from "Hold."

He said the company, based in Issaquah, Wash., can "play both offense and defense" as the economy continues to sputter, thanks to its vast selection of merchandise.

Meanwhile, business in California -- where Costco has about 38 percent of its stores -- have improved as the weather remains warm, Schick said. Balmy temperatures are also driving sales of items such as air conditioning units, which come with both a high price and a high profit.

Schick has a price target of $68 on the stock implying that he expects Costco shares to climb as much as 22 percent in the next 12 months.

On Tuesday, shares of the company rose 60 cents, or 1.1 percent, to $56.31 in premarket activity. The stock closed Monday at $55.71.